Let’s talk about a fundamental difference of opinion on the key energy issue of the day.
We say crude oil supply matters – in the context of global-market pricing, which affects fuel prices because the cost of crude accounts for 76 percent of what Americans are paying at the pump. More supply alters the energy equation, exerting downward pressure on crude prices. Energy Economics 101.
The president seems to disagree, saying there’s no “silver bullet,” while suggesting there’s not much that can be done to affect global markets and offer hope to beleaguered consumers. At the same time he tacitly acknowledges market forces work – but only from the side of the equation that reduces demand through efficiency and other measures.
We’re all for greater efficiency, but the president is ignoring the effect on markets of increasing demand. Or is he, because even as he scoffs at the notion of greater development of domestic oil and natural gas resources, there are conversations with the Saudis about increasing their production, talk of releasing oil from the Strategic Petroleum Reserve and pledges to Brazil that we’ll be customers for their offshore oil when it comes on line – all implying that, yes, supply matters.
Here’s one thing that’s absolutely clear. America’s oil and natural gas companies have a positive, pro-development, pro-jobs strategy to produce more energy right here at home. They believe America has energy options, not unending limitations, and they’re ready to accept the challenge of producing more oil and gas. API President and CEO Jack Gerard during a conference call with reporters this week:
“Despite what you may hear, we are an energy-rich nation, the world’s third-largest producer of oil. We have vast resources that we have not even begun to explore. And by safely developing our own resources of oil and natural gas, we can send a strong signal to the markets that America will control its energy future.”
Here’s what Gerard is talking about:
Changing policies that are limiting offshore energy development to less than 15 percent of available federal areas.
Returning the Gulf of Mexico to pre-2010 production levels.
Reversing the downward trend of leasing and permitting on federal lands (so that public areas can match production on state and private lands in places like North Dakota and Pennsylvania).
Approving the full Keystone XL pipeline, to bring upwards of 800,000 barrels per day of Canadian oil sands crude to U.S. refiners.
Curb government’s enthusiasm for new regulatory layers on the development of the country’s ample shale resources.
Shelving punitive proposals to raise taxes on a few oil and natural gas companies.
Each of the above would acknowledge what the government’s own data shows, that oil and natural gas are mainstays of this country’s energy present and future – rejecting an off-oil strategy that’s rooted in unreality.
Gerard:
“Sending a clear message to people who buy and sell crude oil that the United States is committed to reasserting itself as one of the world’s major oil producers would immediately put downward pressure on gasoline and other fuel prices.”
Gerard called out the administration on its energy claims:
“The administration says it’s already doing a good enough job promoting oil and natural gas development. Check the numbers, it says. We did, and they show oil and natural gas production on federal lands and waters has lagged behind development on private and state lands.”
And issued a challenge:
“Our industry would not be urging the administration to open the door to more development unless it was prepared to walk through that door, unless it envisioned investing its own capital in more projects that could produce more supply and jobs, just like the development that’s already occurring. … We once again urge the administration to act to promote more domestic resources of oil and natural gas. … If the administration will do these things, our companies will produce more American oil and gas.”
Additional resource: Talking energy with Fox News.
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